Sask. government counting on this budget to get it past voting day, but more pain on the horizon

For a long-in-the-tooth provincial government heading into a fall election pitted against a weak Opposition, heightened public concerns about the COVID-battered economy actually provide a great opportunity to further cement its fortunes.

With public support for the cautious approach Premier Scott Moe has taken toward pandemic-related issues evident in polls numbers that peg the Saskatchewan Party 25 points ahead of Ryan Meili's New Democrats, the government had a good deal of leeway in its pre-election budget, even though it ratchets up public debt.

Finance Minister Donna Harpauer's full budget shows the government will increase the debt it has accumulated through program spending shortfalls to $14.3 billion — an increase of $3 billion from last year. Counting the debt of Crown agencies, the total debt will reach $24.37 billion in 2020-21.

Consider that Saskatchewan hasn't made any progress with tackling its accumulated debt over the past decade, even though the period has been the most prosperous in provincial history. From $8.71 billion of debt in 2010-11 ($4.5 billion in program spending deficits) to $13.26 billion in 2015-16, the debt trajectory has been upward.

Every penny of revenue, mostly from resources, has been spent as fast it came in, and then some. This budget promises more of the same.

Saskatchewan residents who remember the aftermath of the Grant Devine government's legacy, which left the province teetering on the brink of bankruptcy in the early 1990s, might see parallels in Monday's budget, but things aren't quite as dire. Even though the current $2.4-billion deficit is nominally the largest in provincial history, it amounts to about three per cent of Saskatchewan's GDP — less than half the 6.8 per cent racked up by Devine's Conservatives in 1986-87.

Although governments across Canada, especially the federal Liberal administration, have vastly increased deficit spending to provide economic stimulus that helps to maintain or save jobs, resource-dependent Saskatchewan is especially vulnerable to global market forces beyond its control.  

Dire straits if recovery stalls

With provincial revenues expected to decline by $1.24 billion from last year as the government deals with pandemic-related expenses and economic turmoil caused by COVID-19 and weak oil-prices, Harpauer expressed confidence that Saskatchewan is well poised to recover, "because we produce what the world needs—food, fuel and fertilizer."

Despite her optimism, it's Saskatchewan's disproportionate reliance on natural resources that leaves it in dire straits should the global pandemic recovery stall, or if the inevitable impacts of climate change upend the province's agricultural fortunes.

There's little in the budget to move the province further away from resource reliance, especially for universities that received a paltry 0.5 per cent more in operating funding to train a new generation of workers for a world increasingly reliant on knowledge-based industries.

The government is counting on capital investments of $7.5 billion over the coming two years to provide economic growth, including a $2-billion "booster shot" Moe announced last month to mitigate the impacts of pandemic-related ills. That attempt at inoculation, however, comes with a few goodies in the form of "large projects that will be announced at a later date," presumably timed for some early fall vote-buying.

The government apparently considers capital investment as the best path toward economic recovery, and offers little for those at the bottom of the income scale who are most hurt by the economic impacts of the pandemic. As well, with most of the jobs to be created and supported in traditionally male dominated sectors such as construction, the economic response seems lopsided. 

Municipalities will welcome $150 million under a new economic enhancement program for shovel-ready local projects in addition to a $27-million increase under the revenue sharing deal that allocates them three-quarters of a percentage point of the PST from two years prior.

However, there's no indication that the province will help them cope with revenue losses from the pandemic — even though municipalities are banned from running deficits — or any word on whether the formula will be changed in two years when their share of the greatly reduced 2020-21 revenues will take a sizeable dip.

With the federal government offering the provinces $14 billion to deal with COVID-19 related impacts, perhaps Saskatchewan's deficit won't be as bad as Harpauer's budget suggests. Alternatively, a recurrence of the pandemic this fall could spell even more trouble ahead for next year.

Heading into an election, the government is counting on this budget to get it past voting day. Just don't count on it remaining intact come the mid-year statement. By then, more pain in the form of service cuts, a PST hike, or civil service layoffs could be a reality. 

This column is part of CBC's Opinion section. For more information about this section, please read this editor's blog and our FAQ.

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